D&L looks to beat 2018 record profit in 2022 | Inquirer Business

D&L looks to beat 2018 record profit in 2022

/ 04:11 PM August 10, 2022

The Lao family’s food ingredients and plastics manufacturing giant D&L Industries Inc. is looking to beat its prepandemic earnings record after exports and commodity sales propelled profits in the first half of 2022 by 17 percent to P1.6 billion.

For the second quarter, net income rose 22 percent to P851 million.

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“It’s possible we can actually achieve a higher net income than we hit in 2018,” D&L president and CEO Alvin Lao said during a media briefing on Wednesday.

He was referring to their all-time high profit of P3.2 billion four years ago.

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D&L’s total sales in the first semester jumped by 61 percent to P22.32 billion.

Earnings during the period were driven by commodity sales, which were lifted by the steep climb in prices. D&L sells commodity biodiesel and refined vegetable oils.

This boosted commodity sales to 51 percent of revenues in the first half. This compares with an average 40 percent of annual sales contribution over the past 11 years, data from D&L showed.

Moreover, export revenue jumped 69 percent in the first half.

“Coconut-based products under food and oleochemicals were the main drivers behind robust export growth in the period,” D&L said in a separate statement.

High margin specialty products sales dropped to 49 percent of revenues during the semester. This refers to customized food and chemical products.

Lao said this was mainly due to the sharp increase in raw material prices.

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“Food customers wanted time to reformulate. They were not ordering as much,” he said.

He noted that other customers were adjusting prices and downsizing packaging sizes, leading to the phenomenon known as “shrinkflation.”

“They were redoing packaging. Some retailers or sellers changed their packaging so prices stayed the same or went up a little but the contents actually decreased a bit,” he said.

High margin specialty products sales volume declined 4 percent in the second quarter, data from D&L showed. Margins in the segment, however, improved 1.7 percentage points compared to the pervious quarter.

“As raw material prices stabilize, the commodities business that grew a lot will come back down and then high margin volume will improve,” Lao said.

“We should revert back to the [revenue] mix that we had before,” he added.

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TAGS: D&L Industries, food ingredients, record profit
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